Italy faces shortfall of over $9 billion on energy windfall tax - document

Italy faces shortfall of over $9 billion on energy windfall tax - document
Italy faces shortfall of over $9 billion on energy windfall tax - document Copyright Thomson Reuters 2022
By Reuters
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By Giuseppe Fonte

ROME – Many Italian energy companies appear to have snubbed an initial windfall tax payment due by the end of June, leaving the government facing a revenue shortfall of more than 9 billion euros ($9.2 billion), a Treasury document showed.

Prime Minister Mario Draghi has budgeted 33 billion euros since January to help firms and households facing sky-high electricity, gas and petrol costs, as the war in Ukraine overshadowed the growth prospects of the euro zone’s third largest economy.

Between 10 and 11 billion euros of the total package was expected to be funded through a 25% windfall tax on energy groups that have benefited from surging oil and gas prices.

Under the scheme, producers and sellers of electricity, natural gas and petrol products should have made a 40% down payment by the end of June with the rest due by November.

But updating fiscal projections in the mid-year budget, a Treasury document presented to parliament this week showed lower-than-expected revenues worth more than 9 billion euros stemming from income taxes as a whole.

“Updated estimates take into account a downward revision on expected windfall tax revenues,” the Treasury said in the document without identifying those who had not complied.

State-controlled energy group Eni said last week it had already paid the first instalment of Italy’s windfall and Italy’s biggest utility Enel said it had booked 2.6 billion euros to pay the windfall taxes imposed by Italian, Spanish and Romanian governments.

Several energy companies complained about the windfall tax, saying that volatile energy prices were also creating problems for their businesses.

Companies that missed the end-June deadline still have the opportunity to pay the levy in the coming weeks or months with accrued penalties and interest, the document added.

However, there is no impact on public finance targets at present, as the rising consumer prices and energy costs lift indirect taxes such as VAT sales tax.

The government said it planned to approve this week a new relief package worth 14.3 billion euros in what will be one of the last major acts of the Draghi government before a national election next month. ($1 = 0.9770 euros)

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